If you are anything like me, you’ve taken a proactive approach to managing your money. And if you are single, this probably means the notion of someday merging finances with a partner is stressful.
In my days as a financially-minded bachelor, I often worried that money and relationships were a toxic trap (and for good reason). Am I going to have to share my money with someone else? What if my partner isn’t as financially responsible as I am? My little head could barely comprehend such things.
As you can surmise from the above statement, the transition to sharing my life and money with Annelise included challenges. When we started to get serious, I had difficulty accepting that our financial lives were merging.
My trepidation went up a few notches once discussions of marriage entered the picture. A wedding alone can become a huge stressor, casting a mess on top of the messiness looming in the decades ahead. Because life is nothing if not messy, and money is a widespread source of messes within relationships.
So, my reservations weren’t far-fetched.
I mean…just think of everything that could go wrong. If you and your partner have serious disagreements about money, it won’t make for an easy life together. I’m not intending to be all doomsday about this, but it is kind of a big deal.
The mechanics of managing money as a couple are important, but so are the conversations that enable a healthy relationship with it to begin with. So let’s take a walk backwards in time to see how Annelise and I navigated these areas.
Talking about money: Scary, messy, and necessary
Remember How I Met Your Mother? Early on in their marriage, Lilly managed to keep a deep, dark secret from her husband Marshall — her significant credit card debt. That is, until they applied for a mortgage to buy their dream home and the truth came out. Mortgage declined.
Look at Lilly and Marshall as a cautionary tale. Try to have open conversations about money with your partner, even though it’s scary and messy. In fact, open up about money with your partner because it’s scary and messy. It won’t get any less scary and messy as time goes by.
And the more things are bottled up, the harder they will be to deal with later. It certainly won’t be any less messy.
Coming to terms with why
Around the beginning of our relationship, I discovered the concept of financial independence/early retirement. In the nascent stages of discovery, I was obsessed. I’d blabber about it to anyone who would lend an ear, even if they had zero interest. I was too blinded by the idea to attempt noticing or caring. At the time, I was extremely dogmatic when it came to money.
This didn’t make for healthy or productive conversations with Annelise. I wasn’t yet able to fully grasp what financial independence meant to me personally. Conversations about money gravitated towards my extreme-leaning plans to save aggressively and leave the workforce well before 50. But my attempts to articulate reasons why fell flat.
When Annelise would call out flaws in my reasoning, I’d respond defensively and shut down. She wanted to understand my why, but I didn’t understand it myself. Frustrated by this, the conversation would end having established little (if any) common ground.
Over many iterations, we got closer and closer to our individual whys.
- Why did we view money so differently?
- Why did we believe money could help us in different ways?
- Why did we envision our ideal future life, and have conflicting views of how money would help us achieve it?
- Why did I want to achieve financial independence?
Digging deep is difficult but powerful
These honest conversations were difficult. Many times, we not only had a hard time understanding each other. We had a hard time understanding ourselves.
That’s because there’s a lot of shit wrapped up in our beliefs and feelings about money. These beliefs are buried deep in all of us — hard to find, and surely hard to make sense of. So it ain’t easy to decide “Yeah, let’s go dig all of that up. Sounds fun to me!”.
Bringing everything to the surface, and having to mix and make sense of it with someone else’s beliefs/feelings, doesn’t make for a light or easy task. In fact, there’s a very real fear that the combination could be explosive (like a chemistry experiment gone awry).
But facing these uncomfortable feelings is the only way to get to a healthier understanding of anything in life. It’s a critical ingredient of a healthy relationship with a partner in any facet, and certainly a healthy financial relationship.
As we continued talking about money over time, we grew to understand and respect the other’s viewpoints. We challenged each other’s thinking, learning a ton about ourselves (and each other) in the process.
We ultimately found that we share the same core values, and want similar things for our future together. We just had different visions of the path that would take us there. This clearer understanding has helped us pave a much better path forward.
Putting a money infrastructure in place
As a result of our (often exhausting) conversations about money, Annelise and I are now fully transparent with each other. Nothing to hide, no skeletons in the closet. No secret mountains of debt standing between us (that she knows about or I know about…kidding…I hope?).
So how do we manage our money today, as a married couple? Here’s the rundown.
Annelise and I schedule periodic financial check-ins to plan for the month ahead. At the beginning of each month, we go over all expenses coming up that month. We discuss our bills and regular expenses, any one-off expenses that may be coming up, and plan for additional costs (social events, trips, etc).
Wife showed up with this bottle of Bogle wine for our weekly finance check-in. It’s safe to say I found a winner! #apropos pic.twitter.com/ctEBz0GfmN
— Andrew | Shift Upwards (@ShiftUpwards) October 5, 2017
We then set a target spending amount for the month, and this becomes our guidepost. We check in around the middle of the month to adjust for any changes and provide extra motivation to stay on track.
We also use these check-ins to discuss any non-trivial changes to our financial lives, including:
- Planning to open new credit cards for travel hacking
- Opening/closing accounts – Annelise recently switched banks for her checking account needs
- Using new products to manage our money
- Big future plans (long-term travel, entrepreneurship, rental property investing, mini-retirement, etc)
These check-ins have helped us immensely. Having them on the calendar holds us accountable for keeping the lines of communication open, rather than repressing difficult money and life related stuff that we don’t feel like talking about and could otherwise ignore.
It would be much more stressful for us to just continue spending separately, never understanding how much our lives truly cost. Checking in on a regular basis helps us both prioritize and course-correct as needed.
Before we even met, Annelise and I both used Mint to track our individual spending. This remained unchanged for the entirety of our dating life (five years), and well into our first year of marriage.
As we approached our first wedding anniversary, we created a third Mint account that consolidated all of our accounts in a single location. This has made it extremely easy to track our combined net worth and spending. This also helps us project our spending going forward.
It didn’t make sense to track our spending and net worth separately and then add everything up to determine our combined numbers. And now that we are bound together by law, our combined numbers are what actually matter.
In addition to tracking our combined spending, we each track our individual spending.
For example, I’m currently funding my mini-retirement from cash I saved on my own. It’s important for me to track the rate at which I’m drawing that money down, so that I know where I stand in terms of burning through all of it.
It wouldn’t be as easy for me to do this through our combined tracking.
Accounts: to combine or not?
We have one joint checking account that is used for big-ticket and irregular expenses. This includes car repairs/maintenance, security deposits, vacations/hotels, and insurance premium payments. We also use this account for income from car sharing.
We’ve talked about expanding the scope of this account to include all shared costs (utility/internet bills, groceries, etc), but have not come to a consensus on the cleanest way to achieve this.
Aside from this one joint account, we kept all of our old accounts and continued using them. We don’t see the need in combining everything into one pool, it would just add complexity.
Of course, this is a personal preference — some couples may find a different approach to be better. It’s all about what works for you and how you manage your money. I often hear people asking about the right way to do this, but there is no right way.
Find what works for you and stick to it. The key is having open communication and understanding about what works for you and why. You don’t need to just take someone else’s word for it.
Investing & saving optimizations
A few years after we started dating, Annelise took an interest in investing outside of her retirement account through work. She had money available, but didn’t know how to invest — so she never bothered starting. She also wasn’t investing optimally in her job-sponsored retirement plan.
Hey, that’s exactly the position I had found myself in a few years prior. And because I’d used that position as a kick-starter for teaching myself to invest optimally, I jumped at the chance to coach her through everything.
- Set up a Roth IRA and taxable brokerage account
- Pored over the ins and outs of asset allocation, fund selection, and tax optimizations
- Found the best funds to invest in through her retirement account
- Determined how much she was comfortable investing each pay period
- Automated her bi-weekly investing plan
- Consolidated her 403b/pension from a previous job into a Traditional IRA with much better investing options (lower fees and more choices)
We walked through each decision, and why it was the best decision. All of this created a baseline for further discussions on saving and investing.
The best part of all is everything is now automated. We spent some time up-front getting things set up, and now it’s on autopilot. And this will allow Annelise to accumulate thousands of dollars in growth and dividends over her lifetime, that she may have otherwise not.
The end result was that Annelise had an automated investing strategy. She was up for challenges such as saving more out of her regular paycheck and maxing out her retirement account. And because we had dug into our whys, we had a shared vision to march towards.
Putting it all together
Having open conversations positioned us to build a rock-solid infrastructure for our shared financial life together. It wouldn’t have been as easy or effective had we avoided taking an honest look at our core beliefs and feelings around money.
We are now able to rationally discuss our financial future without all of the other shit creating a massive diversion from what matters. Don’t get me wrong, we still have disagreements. But we are better at getting to the bottom of them and finding a way forward.
As I look back on the first 8 years of our relationship, I can see that these things took time to develop. As we made progress in one area, it enabled progress in others. But the progress is difficult to see when measured in hours or days. So patience and reflection is key to sustained success.
The things I was worried about back when I was single? They didn’t manifest, and it’s largely because of having some difficult-but-necessary conversations with my partner. Those conversations will pay dividends for decades to come, literally and figuratively.
My wife and I do not maintain any separate accounts except for those required to be separate by law (IRA, etc.). I don’t think that having additional separate accounts is a problem but if you do I think you should have each other’s passwords or link all the accounts to something like Personal Capital where each of you can see all the money because all of it really does belong to both of you. However, you are already a winner, like me you invested in the highest paying investment of all time, that great wife of yours. I did well too, 40 years and one month ago and we are still waiting to have our first money fight!
Yeah, we have a joint Mint account where we can see all our accounts and track our combined spending in one place. It’s been super helpful.
We have had our share of money fights, but we always learn something from them 🙂
Thanks for the comment!
I am divorced, and while I agree with your article your premise only works if you are married to the right person. So many marriages fail because people hardly know themselves, let alone the person they are marrying. Your advice can only work when both people are completely open and always communicate. Also, I don’t think it could work if one person is in debt or has severe financial problems. (Or hiding money from each other) Love is great, but it don’t pay the bills. I think both people should have viable finances before marrying. And both people should understand the other’s mindset about money long before marrying.
James C Hendrickson
Man – I’m totally divorced…and am out like 500,000 in terms of my overall net worth. Dumb move on my part.